LIMITED GUARANTY, PLEDGE AND VOTING AGREEMENT
Exhibit 4.6
EXHIBIT A
This LIMITED GUARANTY, PLEDGE AND VOTING
AGREEMENT (this “Agreement”) is entered into
and effective as of August 14, 2008, by __________________________, an
individual residing at ______________________________, as guarantor and pledgor
(“Guarantor”), in favor
of AROTECH CORPORATION, a Delaware corporation with its principal place of
business located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or its
registered assigns, as secured party (“Secured Party”).
RECITALS
A.
Reference is made to that certain 10% Senior Subordinated
Convertible Note (including each additional 10% Senior Subordinated Convertible
Note issued in accordance with Section 11(d) of said 10% Senior
Subordinated Convertible Note, the “Note”) issued on the date
hereof to the initial Secured Party by DEI Services Corporation, a Florida
corporation with its principal place of business located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Company”), in the principal
amount of $2,500,000.
B.
Guarantor is the record and beneficial owner of certain shares of
Common Stock, no par value per share, of the Company (the “Common Stock”), as set forth
on Schedule I
attached hereto.
C.
As a condition to the granting of financial assistance to the
Company by the initial Secured Party as evidenced by the Note, the Guarantor has
agreed to execute, deliver and perform this Agreement in favor of Secured Party
in order to guaranty and secure with the Collateral (as defined below) the
obligations of the Company under the Note to Secured Party (the “Obligations”), and to agree to
vote his shares for the election of designees of Secured Party to the Company’s
board of directors as set forth herein (the “Voting
Arrangement”).
D.
Guarantor acknowledges and confirms that, as an owner of Common
Stock of the Company, (a) he will benefit from the financial assistance provided
by the initial Secured Party in connection with Secured Party’s purchase of the
Note; (b) each of the guaranty of the Obligations, the pledge of Collateral in
respect thereof and the Voting Arrangement by Guarantor hereunder is intended to
be an inducement to the initial Secured Party to purchase the Note; and
(c) Secured Party is relying upon the guaranty of the Obligations, the
pledge of Collateral in respect thereof and the Voting Arrangement by Guarantor
hereunder in providing financial assistance to the Company in connection with
its purchase of the Note.
Accordingly,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Secured Party to provide financial
assistance to the Company in connection with its purchase of the Note,
Guarantor, intending to be legally bound, hereby agrees as follows for the
benefit of Secured Party:
SECTION
1
DEFINITIONS
1.1. Definitions. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Note. Whenever the context so requires, each
reference to gender includes the masculine and feminine, the singular number
includes the plural and vice versa. This Agreement shall mean such
agreement as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time to
time. References in this Agreement to any Person shall include such
Person and its successors and permitted assigns.
1.2. Defined
Terms. In this Agreement, the following terms shall mean as
follows:
“Bankruptcy Code” shall mean
the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.), as amended
and in effect from time to time and the regulations issued from time to time
thereunder.
“Collateral” shall mean (i) the
issued and outstanding shares of Common Stock owned or held of record by
Guarantor on the date hereof as set forth on Schedule I hereto,
which shares are represented by stock certificates duly executed and delivered
by the Company; (ii) all other shares of Common Stock and shares of any
other series or class of capital stock of the Company owned or held of record by
Guarantor at any time (and the certificates representing such shares); and (iii)
any and all replacements, products and proceeds of, and dividends, distributions
in property or securities, returns of capital or other distributions made on or
with respect to, any of the foregoing.
SECTION
2
LIMITED
GUARANTY
2.1. Guaranty of
Obligations. Guarantor hereby irrevocably guarantees the prompt and
punctual payment and performance of the Note and all Obligations thereunder,
including, without limitation, all amounts from time to time payable by the
Company in connection with the Note (including without limitation, all
Principal, Interest, Late Charges and all other monetary obligations, including
reasonable attorneys fees, costs, expenses and indemnities, whether primary,
secondary, contingent, fixed or otherwise in connection with the Note), and all
of the obligations, terms, covenants and agreements of the Company to Secured
Party under the Note and of the Guarantor to Secured Party hereunder, in any
case whether according to the present terms thereof and hereof, at any earlier
or accelerated date or pursuant to any extension of time or to any change
therein now or at any time hereafter made or granted (such obligations so
guaranteed shall be collectively referred to herein as the “Guaranteed Obligations”);
provided that
the Guaranteed Obligations of Guarantor hereunder shall expressly be limited as
set forth in Section 2.3
hereof. The Guaranteed Obligations include in all cases, subject to
the limitations set forth in Section 2.3
hereof, all such obligations that arise after the filing of a bankruptcy
petition with respect to the Company or Guarantor and all such obligations that
will become payable but for the operation of any Bankruptcy Law involving the
Company or Guarantor, including, but not limited to, interest accruing with
respect to the Obligations after the filing of a bankruptcy petition, whether or
not allowed or allowable as a claim in the bankruptcy proceeding.
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2.2.
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Binding
Effect.
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(a) This
guaranty is a continuing guarantee of prompt and punctual payment of the
Guaranteed Obligations, whether at stated maturity, by acceleration or
otherwise, and not merely a guaranty of collection, subject to the limitations
set forth in Section 2.3. Guarantor
agrees that its obligations hereunder are independent of the obligations of the
Company or any other Person, and shall be binding upon Guarantor and his heirs,
administrators, devisees, legatees, executors, successors and assigns, and are
irrevocable without regard to the genuineness, validity, legality or
enforceability of the Note or Obligations or the lack of power or authority of
the Company to enter into the Note or any substitution, release or exchange of
any other guaranty of or any security for any of the Obligations or any other
circumstances (other than payment or performance) which might otherwise
constitute a legal or equitable discharge of a surety or guarantor and shall not
be subject to any right of set-off or counterclaim and are in no way conditioned
upon any attempt to enforce performance or compliance by the Company or any
other event or contingency, subject to the limitations set forth in Section 2.3.
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(b) Guarantor
agrees that, if at any time all or any part of any payment previously made to
Secured Party to satisfy any Obligation must be returned by Secured Party for
any reason, whether by court order, administrative order, or settlement,
Guarantor shall remain liable for the full amount returned, subject to the
limitations set forth in Section 2.3, as
if such amount had never been received by Secured Party, notwithstanding any
termination of this Agreement or the Note or the cancellation of this Agreement
or the Note or any other agreement evidencing the Obligations or the Guaranteed
Obligations.
(c) Guarantor
hereby acknowledges that the Guaranteed Obligations are secured by the
Collateral and expressly waives any defenses or benefits available to Guarantor
as a result of the exercise by Secured Party of nonjudicial or judicial remedies
against the Company, any other guarantor of the Obligations or any Collateral,
and further expressly waives any defenses or benefits arising out of or against
any Collateral. Guarantor hereby agrees, without limiting the
generality of the foregoing, that Secured Party shall not be required to make
any demand on any other guarantor of the Obligations or otherwise pursue or
exhaust its remedies against the Company or any collateral securing the
Obligations or any other Person before enforcing its rights and remedies against
Guarantor hereunder, and any one or more successive and/or concurrent actions
may be brought against Guarantor in the same action brought against any other
guarantor of the Obligations, the Company or any other Person or in separate
actions, as often as Secured Party may deem advisable, in its sole
discretion. The Guaranteed Obligations shall not in any way be
affected by any action or inaction of Secured Party, which action or inaction is
hereby consented and agreed to by Guarantor, or by the partial or complete
unenforceability or invalidity of any other guaranty, pledge, assignment or lien
for any of the Obligations or of the value, genuineness, validity or
enforceability of the Note, any of the Obligations, this Agreement or any of the
Guaranteed Obligations.
2.3. Non-Recourse. Notwithstanding
anything to the contrary contained in this Agreement or the Note, the Secures
Party’s recovery against Guarantor in respect of the Guaranteed Obligations
shall be limited solely to the Collateral of Guarantor. Guarantor
shall not have any personal liability in respect of the Guaranteed Obligations
under this Agreement for any of the Guaranteed Obligations, and no monetary or
deficiency judgment shall be sought or enforced against Guarantor with respect
thereto under this Agreement. Notwithstanding the foregoing, nothing
contained in this Section 2.3
shall (x) impair the validity of the Obligations or the Guaranteed
Obligation, (y) in any way affect or impair the rights of Secured Party to
enforce any other guaranty of the Obligations or (z) limit the application
of Section 2.7.
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2.4. Defenses of the Company
Waived. The Note shall remain fully enforceable irrespective
of any defenses which the Company, Guarantor or any other Person may assert
under the Note, including, but not limited to, failure of consideration, breach
of warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury (other than prior indefeasible payment in full in cash of
the Obligations (except contingent Obligations for which no claim has been made)
by the Company).
2.5. Liability of
Guarantor. Guarantor agrees that Secured Party, shall have the
full right and power, in its sole discretion and without any notice to or
consent from Guarantor and without affecting or discharging, in whole or in
part, the liability of Guarantor under this Agreement or the Note, to deal in
any manner with the Guaranteed Obligations, Collateral and any security or
guaranties therefor. Without limiting the generality of the
foregoing, the occurrence of any one or more of the following shall not affect
Guarantor’s obligations hereunder or under the Note: (a) new
agreements or obligations of the Company with or to Secured Party or increases,
amendments, extensions, modification, renewals or waivers of default as to any
existing or future agreements or obligations of the Company, with or to Secured
Party or extensions of credit by Secured Party to the Company;
(b) adjustments, compromises or releases of any obligations to or of the
Company, any other guarantor of the Obligations or other Persons, or exchanges,
releases of sales of any security or collateral of the Company, Guarantor or
other Persons; (c) errors, omissions, invalidity or unenforceability of
this Agreement or the Note; (d) reorganization, extensions, moratoria or
other relief granted to the Company pursuant to any law presently in force or
hereafter enacted; (e) interruptions in the business relations between or
among Secured Party, the Company and/or Guarantor; (f) the release or
exchange, in whole or in part, of any other guarantor of the Obligations from
such Person’s guaranty of the Obligations or any security or collateral therefor
or any action or inaction by Secured Party with respect thereto; (g) the
failure of any Person to sign any similar guaranty; (h) subsequent
reorganization, merger or consolidation of the Company or any other change any
of the foregoing’s structure, nature, personnel or location; or (i) any
impairment, modification, change, release or limitation of the liability of the
Company, any other guarantor of the Obligations or any other Person or their
respective estates in bankruptcy resulting from the operation of any present or
future provision of any Bankruptcy Laws, or from the decision of any
court.
2.6. Event of
Default. If an Event of Default shall occur and be continuing,
Secured Party or any assignee thereof shall be entitled to receive hereunder
from Guarantor, upon demand therefor, all of the Guaranteed Obligations, subject
to the limitations set forth in Section 2.3
hereof. For the purposes of this Agreement, an Event of Default shall
not be deemed to have occurred with respect to any Curable Event of Default
until the expiration of any Applicable Cure Period relating
thereto.
2.7. Subordination of Certain
Rights. Upon payment by Guarantor of any sums to Secured
Party, for its benefit, all rights of Guarantor against the Company arising as a
result thereof by way of subrogation, contribution, reimbursement, indemnity or
otherwise shall in all respects be subordinate and junior in right of payment to
the prior indefeasible payment in full in cash and performance of all the
remaining Obligations (except contingent Obligations for which no claim has been
made), subject to the limitations set forth in Section 2.3
hereof. If any amount shall erroneously be paid to Guarantor for any
reason, such amount shall be held in trust for the benefit of Secured Party and
shall forthwith be paid to Secured Party to be credited against the Obligations,
whether matured or unmatured, in accordance with the terms of the
Note. Guarantor shall have no right of subrogation whatever with
respect to the Guaranteed Obligations or to any Collateral or other collateral
therefor until all of the Obligations (except contingent Obligations for which
no claim has been made) have been irrevocably and indefeasibly paid in full in
cash (and/or converted into shares of Common Stock in accordance with the terms
and conditions of the Note) and performed in full and the Note and this
Agreement have been irrevocably terminated, subject to the limitations set forth
in Section 2.3
hereof.
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2.8.
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Savings
Clause.
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(a) It
is the intent of Guarantor and Secured Party that Guarantor’s maximum
obligations hereunder shall be up to, but not in excess of, the maximum amount
which would not otherwise cause the Guaranteed Obligations to be avoidable or
unenforceable against Guarantor under (i) Section 548 of the Bankruptcy
Code (in any case commenced by or against Guarantor within one (1) year from the
date on which any of the Guaranteed Obligations are incurred), (ii) any
state fraudulent transfer or fraudulent conveyance act or statute applied in any
case or proceeding by virtue of Section 544 of the Bankruptcy Code, or
(iii) any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any receivership, readjustment of debt,
dissolution, liquidation or similar Bankruptcy Law) including, without
limitation, any state fraudulent transfer or fraudulent conveyance act or
statute applied in any case or proceeding of any nature commenced by or against
Guarantor. (The substantive laws under which the possible avoidance
or unenforceability of the Guaranteed Obligations shall be determined in any
such case or proceeding shall be referred to herein as the “Avoidance
Provisions”).
(b) To
the extent set forth in subsections (i), (ii), and
(iii) above, but only to the extent that the Guaranteed Obligations would
otherwise be subject to avoidance under the Avoidance Provisions, if Guarantor
is not deemed to have received valuable consideration or reasonably equivalent
value for the Guaranteed Obligations, or if the Guaranteed Obligations would
render Guarantor insolvent, or cause Guarantor to have incurred debts beyond its
ability to pay such debts as they mature, in each case as of the time any of the
Guaranteed Obligations are deemed to have been incurred under the Avoidance
Provisions and after giving effect to the contribution by Guarantor, the maximum
Guaranteed Obligations for which Guarantor shall be liable hereunder shall be
reduced to that amount which, after giving effect thereto, would not cause the
Guaranteed Obligations, as so reduced, to be subject to avoidance under the
Avoidance Provisions. This Section 2.8 is
intended solely to preserve the rights of Secured Party and neither Guarantor
nor any other Person shall have any right or claim under this Section 2.8
against Secured Party that would not otherwise be available to such person under
the Avoidance Provisions.
SECTION
3
COLLATERAL
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3.1.
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Pledge of
Collateral.
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(a) As
security for the due and punctual payment and performance by Guarantor and the
Company of all the Guaranteed Obligations, Guarantor hereby pledges and assigns
to Secured Party, for its benefit and grants to Secured Party, for its benefit,
a continuing first priority security interest in and lien on, the Collateral and
all of Guarantor’s right, title and interest in and to the
Collateral.
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(b) Guarantor
(x) has delivered to Escrow Agent (as defined below) for the benefit of
Secured Party all certificates representing the Collateral described in clause
(i) of the definition of Collateral, and (y) will deliver to Escrow Agent
for the benefit of Secured Party, all certificates representing the Collateral
described in clauses (ii) and (iii) of the definition of Collateral within five
(5) Business Days after Guarantor’s acquisition of such Collateral, in each case
registered in the name of Guarantor, duly endorsed in blank or accompanied by a
stock power duly executed by Guarantor in blank, in form and substance
satisfactory to Secured Party in its reasonable judgment, with any and all
documents necessary to cause Secured Party, for its benefit to have a good,
valid and perfected continuing first priority pledge of and lien on the
Collateral (free and clear of any other liens), including, without limitation,
any necessary notations in the corporate or other records books of the
Company. At any time following the occurrence and continuation of an
Event of Default, at the option of Secured Party, the Collateral or any part
thereof may be registered in the name of Secured Party or its nominees, for its
benefit, and Guarantor covenants that, following the occurrence and continuation
of an Event of Default, upon demand by Secured Party, Guarantor shall, and shall
use his reasonable best efforts to cause the Company to, effect such
registration.
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3.2.
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Voting Rights,
Dividends and Distributions.
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(a)
So long as no Event of Default has occurred, is continuing, would result
therefrom or be caused thereby, subject to the terms of this Agreement,
Guarantor shall be entitled to (i) exercise all voting and/or consensual
rights and powers relating to the Collateral, and (ii) receive and retain
cash dividends and/or distributions payable on the Collateral.
(b) Guarantor
shall execute and deliver (or cause to be executed and delivered) to Secured
Party such proxies, powers of attorney, dividend orders and other instruments as
such other party may request for the purpose of enabling it to exercise the
voting and/or consensual rights and powers that it is entitled to exercise
pursuant to this Agreement and/or to receive the dividends that it is authorized
to receive and retain pursuant to this Agreement.
(c) Upon
the occurrence and continuation of an Event of Default, all rights of Guarantor
to exercise voting and/or consensual rights and powers and/or to receive
dividends that Guarantor is entitled to exercise and/or receive pursuant to this
Section 3.2
shall cease immediately upon receipt of notice by Guarantor from Secured Party,
and all such rights thereupon shall become vested solely and exclusively in
Secured Party, for its benefit automatically without any action by any
Person. Guarantor hereby appoints Secured Party, its
attorney-in-fact, with full power of substitution, which appointment as
attorney-in-fact is irrevocable and coupled with an interest, to take all such
actions upon or after the occurrence and continuation of an Event of Default,
whether in the name of Secured Party or Guarantor, as Secured Party may consider
necessary or desirable for the purpose of exercising such rights and receiving
such dividends. Any dividends, distributions in property, returns of
capital and other distributions made on or in respect of the Collateral, and any
and all cash and other property received in exchange therefor and/or redemption
of any Collateral delivered to Guarantor in violation of this Agreement shall be
held in trust for the benefit of Secured Party, for its benefit and forthwith
shall be delivered to Secured Party, for its benefit. Any and all
money and other property received by Secured Party pursuant to the provisions of
this Section
3.2(c) shall be retained by Secured Party as part of the
Collateral.
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SECTION
4
VOTING
ARRANGEMENT
4.1. Agreement to Vote
Shares. Guarantor hereby agrees to vote all of his shares of
Voting Stock of the Company in favor of two designees of Secured Party in order
to elect said designees to the Company’s board of directors, and confirms and
acknowledges that each of ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, the initial designees of
Secured Party, have been elected as directors of the Company with all the
rights, benefits and privileges of any other member of the Company’s board of
directors, including, without limitation, the right to indemnification,
effective as of the date of this Agreement.
4.2. Board Meetings; Information;
Confidentiality. Guarantor hereby agrees to use his reasonable
best efforts to cause the Company to provide to the designees of Secured Party
serving on the Company’s board of directors with reasonable notice of all
meetings of the board and minutes of each such meeting, along with copies of all
documents presented to the board of directors for its review, approval and/or
discussion; provided, however, that the Company may require such designees to
execute and deliver reasonable and customary confidentiality agreements on terms
and conditions reasonably acceptable to Secured Party to the extent all other
members of the board of directors are then required to execute and deliver
similar agreements.
4.3. Restrictions on Transfers of
Voting Stock and Voting Rights. Except as contemplated by the
Letter Agreement, Guarantor agrees that he shall not transfer any shares of
Voting Stock of the Company or enter into any voting arrangement with any other
Person without the prior written consent of Secured Party.
SECTION
5
REPRESENTATIONS,
WARRANTIES AND COVENANTS
Guarantor
hereby represents and warrants to Secured Party as of the date hereof (which
representations and warranties shall survive the execution and delivery of this
Agreement), and covenants to and agrees with Secured Party, as
follows:
5.1. Collateral. Guarantor
is, or, with respect to the Collateral described in clauses (ii) and (iii) of
the definition of Collateral, will be, the direct record and beneficial owner of
each share, security and other interest that comprises the Collateral, and has
and will have good, valid and marketable title thereto, free and clear of all
liens other than those created by this Agreement. All of the
Collateral has been, or, with respect to the Collateral described in clauses
(ii) and (iii) of the definition of Collateral, will be, duly and validly
issued, fully paid and nonassessable. As of the date hereof, the
Collateral constitutes that percentage of the issued and outstanding capital
stock of the Company held by Guarantor as set forth on Schedule I. The
Collateral is and will be duly and validly pledged by Guarantor to Secured
Party, for its benefit in accordance with law, and, upon delivery to Secured
Party of the certificates representing the Collateral together with the related
stock powers executed in blank, and control by Secured Party of such
certificates and related stock powers, Secured Party, for its benefit has and
will have a good, valid and perfected first priority lien on and security
interest in the Collateral and the proceeds thereof subject to no other liens,
and no filing or other action will be necessary to perfect or protect such lien
other than delivery to Secured Party and control by Secured Party of the
certificates representing the Collateral together with the related stock powers
executed in blank. Guarantor has full legal capacity and right to own
the Collateral and to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereunder, and Guarantor is under no
legal restriction, limitation or disability that would prevent any of the
foregoing. No financing statement relating to any of the Collateral
is on file in any public office. Except as set forth in Section 4 above,
none of the Collateral is subject to any voting agreement or other similar
arrangement.
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5.2. Authority, Execution,
Binding Obligation. Guarantor has the requisite legal
capacity, power and authority to enter into and to perform his obligations under
this Agreement and this Agreement has been duly executed and delivered by
Guarantor and constitutes the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors’ rights generally
and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity). No approval, consent, authorization of, filing registration
or qualification with, or other action by, Guarantor or any other Person
(including, without limitation, the Company or any other holder of capital stock
of the Company) or governmental authority is or will be necessary to permit the
valid execution, delivery and performance of this Agreement by Guarantor or the
consummation of the transactions or creation of the liens and security interests
contemplated hereby other than delivery to Secured Party and control by Secured
Party of the certificates representing the Collateral together with the related
stock powers.
5.3. No
Conflicts. The execution, delivery and performance by
Guarantor of this Agreement and the consummation of the transactions
contemplated hereby and the creation and granting of the security interests and
liens contemplated hereby do not and will not conflict with or violate any
provision of any applicable law, statute, rule, regulation, ordinance, license
or tariff or any judgment, decree or order of any court or other governmental
authority binding on or applicable to Guarantor or any of Guarantor’s properties
or assets.
5.4. Representations and
Warranties under Note. Each of the representations and
warranties set forth in Section 8 of the Note is true and correct as of the
date of this Agreement, except for such representations and warranties which
refer to an earlier specified date, which representations and warranties are
true and correct as of such specified date.
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5.5.
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Certain
Covenants.
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(a) Guarantor
hereby agrees to take or cause to be taken promptly such further actions, obtain
such consents and approvals and duly execute and deliver or cause to be executed
and delivered such further agreements, assignments, instructions or documents
Secured Party may request in its reasonable judgment with respect to or in order
to fully effectuate the purposes, terms and conditions of this Agreement and the
consummation of the transactions contemplated hereby, whether before, at or
after the performance and/or consummation of such transactions or the occurrence
of an Event of Default, including, without limitation, any of the foregoing
necessary or required or requested by Secured Party in its reasonable judgment
to create, perfect, maintain, preserve, continue, validate or otherwise protect,
and from time to time renew, Secured Party’s perfected first priority lien on
and pledge of the Collateral.
(b) Guarantor
shall not take or permit to take any action in connection with the Collateral or
otherwise which would impair in any material respect (as determined by Secured
Party in its reasonable judgment) the value of such Collateral or any portion
thereof or the value of the interests or rights of Guarantor or Secured
Party.
5.6. No Third Party
Beneficiary. No rights are intended to be created under this
Agreement for the benefit of any third party donee, creditor or incidental
beneficiary of Guarantor.
SECTION
6
MISCELLANEOUS
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6.1.
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Indemnification.
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(a) Guarantor
shall indemnify and hold harmless Secured Party, Affiliates of Secured Party,
officers, directors, consultant, agents and employees of Secured Party and any
of Secured Party’s Affiliates and their respective representatives, successors
and assigns (each an “Indemnified Party”), against
and in respect of any and all claims, suits, actions, assessments, costs,
expenses, damages, liabilities, losses and deficiencies, including, without
limitation, reasonable counsel fees and other costs and expenses incident to
investigating or defending any claims, suit, or action commenced or threatened,
any interest or penalties, and any and all amounts paid in settlement of any
claim, suit or action (“Damages”), arising out of,
resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty hereunder, under the Note or under
any other Guaranty, (ii) the breach by the Company of any covenant,
agreement or other obligation to be performed, or complied with, by the Company
under the Note, (iii) the breach by Guarantor of any covenant, agreement or
other obligation to be performed, or complied with, by Guarantor under this
Agreement, or (iv) the breach by any other guarantor of the Obligations of
any covenant, agreement or other obligation to be performed, or complied with,
by such guarantor under its Guaranty.
(b) In
the case of any claim for indemnification arising from a claim of a third party,
an Indemnified Party shall give prompt written notice, following such
Indemnified Party’s receipt of such claim or demand, to Guarantor of any claim
or demand of which such Indemnified Party has knowledge and as to which it may
request indemnification hereunder; provided, however, that failure to give such
notice will not affect such Indemnified Party’s rights furnished hereunder
unless, and then solely to the extent that, the rights of the parties from whom
indemnity is sought are materially prejudiced as a result of such failure.
Guarantor shall have the right to defend and to direct the defense against any
such claim or demand, in his name or in the name of the Indemnified Party, as
the case may be, at the expense of Guarantor, and with counsel selected by
Guarantor, unless (i) such claim or demand seeks an order, injunction or other
equitable relief against the Indemnified Party, (ii) upon the request of the
Indemnified Party, Guarantor is unable to provide reasonable evidence to the
Indemnified Party of its financial ability to satisfy its indemnification
obligations, (iii) such claim or demand relates to or otherwise implicates
the ongoing operation of the Indemnified Party’s business, or (iv) the
Indemnified Party shall have reasonably concluded that (x) there is a conflict
of interest between the Indemnified Party and Guarantor in the conduct of the
defense of such claim or demand or (y) the Indemnified Party has one or more
defenses not available to Guarantor. Notwithstanding anything in this
Agreement to the contrary, the Indemnified Party shall, at the expense of
Guarantor, use reasonable efforts to cooperate with Guarantor, and keep
Guarantor fully informed, in the defense of such claim or demand. The
Indemnified Party shall have the right to participate in the defense of any
claim or demand with counsel employed at its own expense; provided, however,
that, in the case of any claim or demand described in clauses (i), (ii), (iii)
or (iv) of the second preceding sentence or as to which Guarantor shall not in
fact have employed counsel to assume the defense of such claim or demand, the
reasonable fees and disbursements of such counsel shall be at the expense of
Guarantor. Guarantor shall have no indemnification obligations with
respect to any such claim or demand which shall be settled by the Indemnified
Party without the prior written consent of Guarantor, which consent shall not be
unreasonably conditioned, delayed or withheld. Guarantor shall not
settle any such claim without the prior written consent of the Indemnified
Party, unless such claim solely involves a claim for monetary Damages and such
settlement is accompanied by a document releasing the Indemnified Party from all
liability with respect to the matter in controversy.
-9-
|
|
6.2.
|
No Waiver of Defaults;
Waiver.
|
(a)
No course of action or dealing, renewal, waiver, release or extension of
any provision of the Note or this Agreement, or single or partial exercise of
any such provision, or delay, failure or omission on Secured Party’s part in
enforcing any such provision shall affect the liability of Guarantor or operate
as a waiver of such provision or preclude any other or further exercise of such
provision. No waiver by Secured Party of any one or more defaults by
any other party in the performance of any of the provisions of Note or this
Agreement shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver.
(b) Notwithstanding
any other provision of this Agreement or the Note, by exercising any of its
rights hereunder or thereunder or by completing any of the transactions
contemplated hereunder or thereunder, Secured Party neither waives any breach of
any representation or warranty under the Note or this Agreement, and all of
Secured Party’s claims and rights resulting herefrom or therefrom are
specifically reserved. Except as expressly provided for herein,
Guarantor hereby waives setoff, counterclaim, demand, presentment, protest, all
defenses with respect to any and all instruments and all notices and demands of
any description (including, without limitation, notice of acceptance hereof,
notice of any credit extended, collateral received or delivered) and the
pleading of any statute of limitations as a defense to any demand under the
Note, it being the intention that Guarantor shall remain liable under this
Agreement and the Note until the full amount of all of the Obligations (except
contingent Obligations for which no claim has been made) shall have been
indefeasibly paid in cash (and/or converted into shares of Common Stock in
accordance with the terms and conditions of the Note) and performed and
satisfied in full and the Note terminated, notwithstanding any act, omission or
anything else which might otherwise operate as a legal or equitable discharge of
Guarantor, subject to the limitations set forth in Section 2.3
hereof. Guarantor hereby waives any and all defenses and
counterclaims it may have or could interpose in any action or procedure brought
by Secured Party to obtain an order of court recognizing the assignment of, or
lien of Secured Party, for its benefit, in and to, any Collateral.
-10-
6.3. Entire
Agreement. This Agreement constitutes the entire agreement
between Guarantor and Secured Party solely with respect to the subject matter
hereof, and supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made solely with
respect to the guaranty and pledge of collateral security for the Obligations by
Guarantor shall have no force and effect unless in writing signed by the parties
hereto. Each party hereto acknowledges that such party has been
advised by counsel in connection with the negotiation and execution of this
Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
6.4. Amendment. Except
as otherwise provided herein, no provision of this Agreement may be changed,
modified, amended, restated, waived, supplemented, discharged, canceled or
terminated orally or by any course of dealing or in any other manner other than
by a written agreement signed by Secured Party and
Guarantor. Guarantor hereby agrees that Secured Party may without
Guarantor’s consent amend Schedule I to this
Agreement in order to update the table set forth thereon to reflect additions
to, releases of or other updates to the Collateral.
6.5. Notices. All
notices, requests, claims, demands and other communications hereunder shall be
in writing and shall be given by delivery in person, by e-mail (with a delivery
receipt), fax (with confirmation of receipt), guaranteed overnight delivery
service (with a delivery confirmation) or by registered or certified mail
(postage prepaid, return receipt requested) to Secured Party or the Guarantor,
as applicable, at the following addresses:
(i) If
to Secured Party, to:
Arotech
Corporation
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chairman
and CEO
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
with a
copy (which will not constitute notice)
to:
-11-
▇▇▇▇▇▇
Har-Oz, Esq.
Vice
President and General Counsel
Arotech
Corporation
c/o
Electric Fuel Ltd.
One
HaSolela Street, Western Industrial ▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇-▇▇▇-▇▇▇▇
Fax: 011-972-2-990-6688
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
and a copy (which will not constitute notice)
to:
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
E-mail: @▇▇▇▇▇▇▇▇▇▇.▇▇▇
(ii) If
to Guarantor, to:
[ ]
[ ]
[ ]
|
Telephone:
|
[ ]
|
|
Fax:
|
[ ]
|
|
E-mail:
|
[ ]
|
with a
copy (which will not constitute notice)
to:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
Gateway
Center
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
(iii) If
to Escrow Agent:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., Esq.
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
Gateway
Center
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-12-
or at
such other address for Secured Party, Guarantor or Escrow Agent as shall be
specified by like notice. Any such notice or request shall be given
only by, and shall be deemed to have been received
upon: (a) registered or certified mail, return receipt
requested, on the date on which such received as indicated in such return
receipt, (b) delivery by a nationally recognized overnight courier, one (1)
Business Day after deposit with such courier, or (c) facsimile or
electronic transmission, in each case upon telephone or further electronic
communication from the recipient acknowledging receipt (whether automatic or
manual from recipient), as applicable.
|
|
6.6.
|
GOVERNING
LAW; JURISDICTION; VENUE; CONSTRUCTION.
|
(a) THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW PROVISIONS THAT WOULD RESULT IN THE
APPLICATION OF THE LAWS OF A DIFFERENT JURISDICTION. ANY JUDICIAL
PROCEEDING AGAINST GUARANTOR WITH RESPECT TO THE GUARANTEED OBLIGATIONS, THE
COLLATERAL OR THIS AGREEMENT MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT OF
COMPETENT JURISDICTION LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK.
(b) By
execution and delivery of this Agreement, Guarantor (i) accepts the
non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be
bound by any judgment rendered thereby, (b) waives personal service of
process, (c) agrees that service of process upon Guarantor may be made by
certified or registered mail, return receipt requested, pursuant to Section 6.5 hereof,
and (d) waives any objection to jurisdiction and venue of any action
instituted hereunder and agrees not to assert any defense based on lack of
jurisdiction, venue, convenience or forum non
conveniens. Nothing shall affect the right of Secured Party to
serve process in any manner permitted by law or shall limit the right of Secured
Party to bring proceedings against Guarantor in the courts of any other
jurisdiction having jurisdiction. Any judicial proceedings against
Secured Party, involving, directly or indirectly, the Guaranteed Obligations,
Collateral or this Agreement shall be brought only in a federal district court
sitting in New York County, New York or a New York state court sitting in New
York County, New York. Guarantor acknowledges that it participated in
the negotiation and drafting of this Agreement and that, accordingly, it shall
not move or petition a court construing this Agreement to construe it more
stringently against one party than against any other.
6.7. Severability;
Captions. If any provision of this Agreement is adjudicated to
be invalid under applicable laws or regulations, such provision shall be
inapplicable to the extent of such invalidity without affecting the validity or
enforceability of the remainder of this Agreement which shall be given effect so
far as possible. The captions in this Agreement are intended for
convenience and reference only and shall not affect the meaning or
interpretation of this Agreement.
-13-
6.8. Successors and
Assigns. Except to its Affiliates, Secured Party shall not
assign, delegate or transfer this Agreement or any of its rights or obligations
hereunder without the prior written consent of the
Guarantors. Subject to the limitations contained herein, this
Agreement (a) shall inure to the benefit of, and may be enforced by, Secured
Party, its successor, assigns and transferees, and all future holders of the
Note or any of the Guaranteed Obligations and each of their respective
successors and permitted assigns, and (b) shall be binding upon and enforceable
against Guarantor and Guarantor’s heirs, administrators, devisees, legatees,
executors, successors and assigns. Guarantor shall not assign,
delegate or transfer this Agreement or any of its rights or obligations
hereunder without the prior written consent of Secured Party. This
Agreement shall be binding upon Guarantor and his heirs, administrators,
devisees, legatees, executors, successors and assigns. Nothing
contained in this Agreement or the Note shall be construed as a delegation to
Secured Party of Guarantor’s duty of performance. EXCEPT TO ITS
AFFILIATES, SECURED PARTY SHALL NOT AT ANY TIME (I) DIVIDE AND REISSUE THE
NOTES, AND/OR (II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER
ALL OR ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT, THE NOTE, THE
OBLIGATIONS, AND/OR THE COLLATERAL. The term “Secured Party” in this
Agreement includes transferees and successors and assigns permitted hereunder,
each of which shall have all rights and benefits of Secured Party
thereunder. Each transferee shall have all of the rights and benefits
with respect to the Guaranteed Obligations, the Note, the Collateral and/or this
Agreement held by it as fully as if the original holder
thereof.
6.9. Waiver of Jury
Trial. GUARANTOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING HEREUNDER OR IN ANY WAY CONNECTED
WITH OR INCIDENTAL TO THE DEALINGS OF GUARANTOR AND SECURED PARTY WITH RESPECT
HERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT
SECURED PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF GUARANTOR TO THE WAIVER OF HIS
RIGHTS TO TRIAL BY JURY.
6.10. Survival. It
is the express intention and agreement of Guarantor that all covenants,
representations, warranties and waivers and indemnities made by Guarantor herein
shall survive the execution, delivery and termination of this Agreement until
all of the Obligations are performed in full and indefeasibly paid in full in
cash (and/or converted into shares of Common Stock (or other securities) in
accordance with the terms and conditions of the Note) and the Note is
terminated, subject to the limitations set forth in Section 2.3
hereof. Notwithstanding the foregoing, if the Note is converted in
accordance with the terms and conditions thereof, then this Agreement, other
than the covenants and agreements of Guarantor set forth in Sections 2, 3 and 5.5
hereof, shall survive the indefeasible payment in full in cash of the
Obligations (and/or conversion into shares of Common Stock (or other securities)
in accordance with the terms and conditions of the Note) and the termination of
the Note until the earlier of (i) the transfer of all or substantially all
of the Common Stock or assets of the Company in accordance with the terms of the
Letter Agreement and (ii) 11:59 p.m., New York time,
on December 31, 2009.
-14-
6.11. Expenses. Guarantor
shall pay to Secured Party and its Affiliates (and, with respect to all items
below, relating to and/or arising out of or resulting from any Event of Default
or occurring thereafter) all costs and expenses incurred by Secured Party and/or
its Affiliates, as applicable, including, without limitation, all professional
and filing fees and expenses and all other out-of-pocket charges and expenses,
and reasonable attorneys’ fees and expenses (a) in any effort to enforce
this Agreement against Guarantor to the extent Guarantor or any Person acting on
behalf of Guarantor is contesting enforcement hereof, (b) in defending or
prosecuting any actions, claims or proceedings by or against Guarantor arising
out of or relating to this Agreement and/or the Collateral, (c) to the
extent such costs and/or expenses are not paid by Company, arising in any way
out of the taking or refraining from taking by Secured Party of any action
requested by Guarantor, and/or (d) to the extent such costs and/or expenses
are not paid by Company, in connection with any modification, restatement,
supplement, amendment, waiver or extension of this Agreement and/or any related
agreement, document or instrument requested by Guarantor. If Secured
Party or any of its Affiliates uses in-house counsel for any of the foregoing,
Guarantor expressly agrees that its obligations hereunder include reasonable
charges for such work commensurate with the fees that would otherwise be charged
by outside legal counsel selected by Secured Party or such Affiliate in its sole
discretion for the work performed.
6.12. Attorney in
Fact. Guarantor hereby irrevocably appoints Secured Party as
Guarantor’s attorney in fact to take any action Secured Party deems necessary or
desirable upon the occurrence and continuation of an Event of Default to
perfect, protect and realize upon its lien and first priority security interest
in the Collateral, including the execution and delivery of any and all documents
or instruments related to such Collateral in Guarantor’s name, or otherwise to
effect fully the purpose, terms and conditions of this Agreement and the Note,
and said appointment shall create in Secured Party, a power coupled with an
interest.
6.13. Escrow
Agent. Guarantor, and by its purchase and acceptance of the
Note, Secured Party, appoints ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, P.A. to serve as
escrow agent (“Escrow
Agent”) for the Collateral for the benefit of Secured Party, and by its
execution and delivery of its acknowledgement to this Agreement, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ and ▇▇▇▇▇▇, P.A. hereby (i) accepts its engagement as Escrow Agent
for the benefit of Secured Party, (ii) agrees that it shall deliver the
Collateral to Secured Party should it resign as Escrow Agent while the
obligations under Sections 2 and 3.1 hereof are still
in effect if Guarantor and Secured Party have not mutually agreed upon a
replacement escrow agent, and (iii) agrees that it shall reasonably perform
all of the duties customarily performed by an escrow agent with respect to
collateral of similar type to Collateral and shall owe fiduciary duties to
Secured Party in its capacity as Collateral Agent. Guarantor hereby
agrees that he shall be responsible for paying all fees and expenses of Escrow
Agent relating to its engagement as Escrow Agent hereunder and that Secured
Party shall have no liability whatsoever with respect to any such fees, expenses
or other costs.
6.14. Termination. This
Agreement shall continue in full force and effect until full performance and
indefeasible payment in full in cash of all Obligations (except contingent
Obligations for which no claims has been made) and termination of the Note,
subject to the limitations set forth in Section 2.3
hereof. Notwithstanding any other provision of this Agreement or the
Note, no termination of this Agreement shall affect Secured Party’s rights or
any of the Guaranteed Obligations existing as of the effective date of such
termination until the all of the Obligations have been fully performed and
indefeasibly paid in cash in full (and/or converted into shares of Common Stock
in accordance with the terms and conditions of the Note) (except contingent
Obligations for which no claims has been made), except as set forth in Section 2.3
hereof. The liens granted to Secured Party hereunder and the rights
and powers of Secured Party hereunder shall continue in full force and effect
until all of the Obligations (except contingent Obligations for which no claims
has been made) have been fully performed and indefeasibly paid in full in
cash (and/or converted into shares of Common Stock in accordance with
the terms and conditions of the Note), except as set forth in Section 2.3
hereof.
[Signature Page
Follows.]
-15-
IN
WITNESS WHEREOF, the undersigned Guarantor has duly executed this Limited
Guaranty, Pledge and Voting Agreement as of the date first written
above.
| GUARANTOR: | |||
|
Name:
|
|||
|
Address:
|
|||
|
Telephone:
|
|||
|
Facsimile:
|
|||
|
E-mail:
|
|||
Signature
Page to Limited Guaranty, Pledge and Voting Agreement
-16-
ACKNOWLEDGEMENT
OF ESCROW AGENT
Acknowledged
and, for the purposes of Section 6.13 of this Limited Guaranty, Pledge and
Voting Agreement, agreed to, as of the date first written above.
ESCROW
AGENT:
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ AND ▇▇▇▇▇▇, P.A.
|
By:
|
||
|
|
Name:
|
|
|
|
Title:
|
Address:
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
Gateway
Center
▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., Esq.
Telephone: ▇-▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇-▇▇▇-▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
SCHEDULE
I
Shares of
each class or series of capital stock of DEI Services Corporation, a Florida
corporation, owned of record and beneficially by Guarantor:
|
Class
or Series
of
Securities
|
Number of Shares
|
Percentage
of
Class or Series
|
Stock Certificate Number
|
||||||
|
Common
Stock, no par value
|
___________
|
_____%
|
______
|